THE Reserve Bank has left rates on hold at 3.5 per cent as concerns about a global slowdown eased.

RBA Governor Glenn Stevens said financial markets had responded "positively" to the measures taken by European leaders to defuse the ticking debt time bomb, even if concerns about adverse shocks remain.

In his monthly post-meeting statement, Mr Stevens was upbeat that the Australian economy continued to grow in the first six months of 2012 at a pace "stronger than had been earlier indicated" with unemployment levels low despite job losses in some sectors.

The housing market remains "subdued" and inflation is under control, Mr Stevens said.

The RBA's decision to cut by 125 points since November has maintained "growth at close to trend" and despite the subdued global outlook the current monetary position is appropriate.

He said the RBA expected inflation to remain within the RBA's target band of two to three per cent.

"The board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance on monetary policy remained appropriate,'' he said

But he said growth in domestic costs would need to slow over the longer term to maintain inflation within that band.

Mr Stevens said interest rates charged by banks had fallen in recent months as a result of the RBA's recent rate cuts.

"Interest rates for borrowers have declined, to be a little below their medium-term averages,'' Mr Stevens said.

"The jobs and growth data from the first quarter (of 2012) were pointing to a wait and see attitude, particularly since they'd cut twice in the last two months," he said.

"So the decision was very much in-line with expectations."

Financial comparison website RateCity said they were not surprised by today's decision.

"It will take a few months for the recent rate cuts to flow through to the economy and measure their impact. There’s been two rate cuts totalling 75 basis points in two months, and we haven’t seen the RBA move so dramatically in almost three years. If economic conditions deteriorate overseas or locally, there is still plenty of room for the RBA to lower the cash rate if it needs to."

Even if the RBA decided to cut rates, there was no guarantee it would be passed on by the banks.

Research found only seven of 107 lenders passed on last month's full rate cut.

ANZ was the only one of the big four banks to pass on the full 25 bass points.

The research also found 19 lenders were still yet to pass on any cut from last month's decision.

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